Tesco Bank has launched Clubcard Pay, an interesting new debit card product that you top up from your bank account.
We are writing about it because you earn Clubcard points on each transaction you make using Clubcard Pay. These can be converted into Virgin Points, Hotels.com credit or various other rewards.
If you remember the Tesco current account debit card, which is now closed to new applicants, it is very similar.
You can learn more about Clubcard Pay on its website here.
How does Clubcard Pay work?
This is how Clubcard Pay works:
- Clubcard Pay is a Visa debit card
- Clubcard Pay has no application fees or annual fees
- You top it up by loading funds from your current account, which can be with any bank, via the Tesco Bank mobile app
- You can use the card anywhere that debit cards are accepted
- You earn 1 Clubcard point for every £8 you spend outside Tesco
- You do not earn anything when you spend in Tesco, apart from the ‘base’ earning of 1 Clubcard point per £1 spent (Clubcard Pay replaces your standard Clubcard)
- You earn nothing if you use Clubcard Pay to pay into bank accounts, NSI or other financial institutions (the position with HMRC is not clear), share dealing accounts, gambling accounts or if you withdraw money via ATMs
- There is a 2.75% foreign exchange fee, so there is no benefit in using this card when you travel
There is an optional extra feature where you can round up each transaction to the nearest £1 and save the money via Tesco Bank. You can disable this and I am ignoring it here.
The Tesco in-store earning rate looks weird ….
Tesco appears to be saying that you won’t earn anything extra on your Tesco spending, after Day 100, but you will earn extra points on spending elsewhere.
For the first 100 days, you WILL earn an extra 1 Clubcard point for every £1 spent at Tesco or in a Tesco garage.
After that, you revert back to your standard Clubcard earning rate of 1 point per £1. This is instead of, and not on top of, the 1 point per £1 you would get for swiping a standard Clubcard.
Here is the text to confirm it:
“For the first 3 months (100 days to be exact) after you open your Clubcard Pay account you’ll collect 2 Clubcard points for every £1 you spend using your Clubcard Pay debit card, on qualifying products in Tesco and on Tesco Fuel (excludes Esso). That’s one extra Clubcard point for every £1 you spend. After 100 days, you will go back to the Clubcard points collection rate you usually get in Tesco when using your Clubcard.”
Double points on Tesco shopping is small change to many HfP readers, however. The key issue is what you earn on general debit card spending.
Based on 1 Clubcard point per £8 spent, you would receive:
- 2.5 Virgin Points per £8 spent
- 3p of Hotels.com voucher per £8 spent
….. and so on. The full list of Tesco Clubcard travel redemption partners is here and of course there are many non-travel options too.
Clearly this is not very attractive compared to credit card rewards. It is even worse than it looks, because it is based on a ‘per transaction’ basis. A payment of £7.99 earns you no points. A payment of £15.99 only earns you 1 Clubcard point.
Who should get this card?
If you make substantial and regular payments by debit card – excluding payments to banks, gambling sites, NSI, financial institutions etc – then this looks like an interesting deal.
You will be getting no rewards on your debit card transactions at the moment, so even a paltry sum is better than nothing.
If it works for paying HMRC I could be interested. When you are paying large sums of VAT, PAYE, self-assessment etc even a tiny return like 2.5 Virgin Points per £8 will add up.
It may work for people who can’t justify the £150 annual fee for Curve Metal. Curve Metal allows you to pay HMRC using a Visa or Mastercard credit card for free, earning credit card rewards.
If you are not a big user of debit cards, I don’t see the attraction of Clubcard Pay – especially as you have to keep it topped up via manual transfers which adds extra faff to your life.
You can find out more about Clubcard Pay on the Tesco Bank website here.
Want to earn more points from credit cards? – September 2023 update
If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.
In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.
You qualify for the bonus on these cards even if you have a British Airways American Express card:
You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.
SPECIAL OFFER: The sign-up bonus on the Virgin Atlantic Reward+ Mastercard is doubled to 30,000 Virgin Points if you apply by 2nd October. You receive 15,000 Virgin Points with your first purchase and a further 15,000 points if you spend £3,000 within 90 days. Apply here.
British Airways American Express Premium Plus
25,000 Avios and the famous annual 2-4-1 voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review
The Platinum Card from American Express
30,000 points and a huge range of valuable benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
30,000 bonus points (SPECIAL OFFER TO 2ND OCTOBER) and 1.5 points for every £1 you spend Read our full review
Earning miles and points from small business cards
If you are a sole trader or run a small company, you may also want to check out these offers:
American Express Business Platinum
40,000 points bonus and an annual £200 Amex Travel credit Read our full review
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
Capital On Tap Business Rewards Visa
Get a 10,000 points bonus plus an extra 500 points for our readers Read our full review
For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.